A panel of experts
discuss various funding options out there and how to make sense of it all
What sort
of funding options are available out there and how do you pick the right one for
you?
This article was written before the Government announced Coronavirus measures.
Businesses are often spoiled for choice when it comes to funding options available. Is it better to seek out multiple funding options or rely on that one angel investor to reel in the cash? Deri Llewellyn-Davies, Founder of BGI Group, Richard Bearman, Managing Director of the British Business Bank, Leah Moon, Legal Director and Head of US Legal Operations at Seedrs, Paul Conway, Director of Channel Sales at Bottomline and Simon Cureton, CEO of Funding Options spoke about the various types of funding resources available for SMEs in the Investments and Assets panel at Elite Business’ live event on March 9. They discussed exactly how businesses can utilise the innovative funding resources out there to successfully scale up their company.
It is important to seek advice when it comes to making better financial decisions, but how do you end up making the right choice? Mr Bearman, MD of the British Business Bank believes seeking advice is helpful but said businesses must eventually take control into their own hands and execute a clear plan of action. “I think from my experience working with businesses of all sizes is the juxtaposition for seeking advice, seeking support and getting counsel from people around you,” he said. “You won’t know the answer yourself. But too often, people swirl around seeking advice and get into a sort of maelstrom. Sometimes you have to act as well. The secret is knowing when you’ve got enough information and enough support around to then strike out and make the actual decision and get on with it.”
Meanwhile, Mr Llewellyn-Davies said it all comes down to businesses understanding the numbers and data truly get to the root of their problem to understand how much finance they need and where to get it from. “I just don’t think you can shortcut the basics. To make better financial decisions, you need to understand finance,” Llewellyn-Davies said. “And this is the biggest issue for most business owners, it’s not their skill set… You do need to understand the story the numbers are telling you, and only you as the business owner can truly understand the story. Because the numbers are telling us a story, that’s all there is. The numbers don’t lie, the story can.”
Mr Conway, Director of Channel Sales at Bottomline spoke about the different funding options out there that businesses can utilise, and urged SMEs to be innovative when it comes to seeking out ways to manage their finances to give them cutting edge when seeking out investors. “For people who are looking to fund their business, they don’t realise that there are different options out there that they can utilise. For example, we happen to have a window cleaner in our business. He’s now using direct debits to collect money from his customers. Now that’s incredible because he can predict where his money is coming in, he can give his customers service because they know exactly how much they’re paying out. If you’re going to look for further funding to increase your business, what is a bank or a funding institution going to look for? They’re going to look for consistency. They’re going to look for what you know about your business and what your money looks like, and that is a great way which you can use payment technology to give you the edge.”
Speaking about the different investment opportunities out there, Mr Cureton, CEO of Funding Options touched on Merchant Cash Funding and how this can be a good option for businesses who are struggling to stay afloat. “There are some weird and wonderful things such as MCA, Merchant Cash Advance, where a business has that turnover, a lender can lock into the assurance of that ongoing turnover and provide finance of the back of that,” he said. “If you’re a business in distress for example and have large expensive machinery, you can again lock into that asset. It’s one of the ways for you to find finance to improve your position if you are struggling. For me, it’s all about the business being as prepared as it can be. There’s the old cliché of a businessman or woman sort of sitting there and the last thing they think about is finance, so everything they do is at the last minute. And if they don’t have the preparation or access to the right advice, they can find themselves in quite a perilous position very quickly.”
Leah Moon, Legal Director and Head of US Legal Operations at Seedrs, explained why it is important to cast a wide net when it comes to raising funds for your business rather than sticking to just one source to maximise their gains and take advantage of the array of funding options available. “When I first started, equity crowdfunding was very new. At the time when equity crowdfunding rose, it was an alternative because businesses genuinely couldn’t get loans from the banks and so it was more of a last resort type of thing,” she said. “Over the years, people have recognised the use of crowdfunding and all the valuable marketing opportunity there. It is becoming much more widespread. And the great thing about it is that it can be done alongside other funding options. 60% of our campaigns have equity crowdfunding alongside either angel, syndicate or VC investments. It can go together.”
“It’s essential that you get your network to support to your business…” Leah added. “Your supporters, whether its friends, family, angel investors, dedicated customers who believe in your company and are willing to invest in it, and that will get you on the path to success.”
